Crowd wisdom refers to the idea that large groups of people are collectively smarter than individual experts.
The Wisdom of the Crowd was first popularized by New Yorker writer James Surovecki in his 2004 book The Wisdom of the Crowd.
The wisdom of the crowd theory helps to explain the movement of the market and the herding behavior of investors.
For the crowds to be wise, they must be characterized by a variety of opinions, and the opinion of each person must be independent and free from the influence of others.
The quality of the crowd matters, as an ill-informed crowd or a crowd with little knowledge can lead to adverse outcomes.